Balance Transfer & Purchases

What is a balance transfer and purchase credit card?

A balance transfer and purchase credit card allows you to transfer balances (debts) from other cards and continue to buy new purchases, both at low or even zero interest rates.

The low or zero (0%) interest rates are usually offered for a fixed number of months, from five months to 30.

Balance transfer

Balance transfer credit cards are a useful way to manage your existing debt. They let you transfer your balance to a new credit account, often with a much lower interest – sometimes with no interest at all.

This can last anywhere from months to years, making it easier to pay off your debt. However they can also come with fees – often given as a percentage of the debt you’re transferring over. Read more on our page for balance transfer credit cards.

Data collected by MoneySuperMarket, correct as of July 2018

Purchase

Purchase credit cards are good for everyday use, for example when you’re in a shop or restaurant. This is because they offer low or no interest when you use them for purchases – meaning you’re essentially borrowing money for free or at a very low cost.

They can be useful for spreading the cost of large purchases to make them more affordable. However, once the introductory rate period ends you’re generally put back on the lenders SVR (Standard Variable Rate) – which is often quite high.

0% interest deals

Many balance transfer and purchase cards offer zero interest – meaning you don’t pay anything at all on top of the money you borrow (with the exception of any fees for arrangement or late/early payment).

For example, say you pay for a £2,400 holiday with a card that charges zero interest for 12 months. If you set up a direct debit to pay £200 every month for a year, you will clear the debt by the time the 0% offer expires and pay no interest. In other words, the card works like an interest-free loan.

At the same time, you can switch any debts you have on another card to your new card. And, again, so long as you clear the outstanding balance within the 0% period, you will pay no interest. Have a look at our page on zero interest credit cards to learn more.

Do I need a balance transfer and purchase credit card?

A benefit of having one card in your wallet rather than two is that it can make things much easier to manage. You’ll get one bill to repay each month, one statement to check, and one balance to keep an eye on when you use the card.

Data collected by MoneySuperMarket, correct as of July 2018

Difficulty with debt

Most cards these days do not charge an annual fee, but there will almost certainly be penalties if you are late with a payment, miss a payment or breach your credit limit.

If you think you are getting into difficulty with debt, seek advice immediately. A number of organisations offer free debt advice, including National Debtline and Step Change.

Transfer fees

Watch out for fees though. Most 0% balance transfer cards charge a fee of between 2% and 3% of the outstanding balance to switch. A borrower with a debt of £2,000 could therefore pay a transfer fee of up to £60. But don’t let the fees put you off completely as you can still often make a saving by moving to a cheaper card.

You should also read the terms and conditions carefully as most cards do not offer the same deal on balance transfers and purchases. For example, your card might charge 0% on purchases for 12 months and 0% on balance transfers for nine months – and it can be confusing to juggle the two schedules. You might also be able to get a better deal if you opt for two separate cards.

Compare balance transfer and purchase credit cards

It’s easier to find a better deal on credit cards if you compare your options on MoneySuperMarket. All you need to do is tell us about yourself and your finances, and we’ll show a tailored list of credit cards for you to choose from.

You’ll be able to sort them by the likelihood of you being accepted if you apply, as well as comparing them by interest rates and any benefits or incentives included. Once you find the card you want, just click through to the provider to finalise the deal.

If your application is successful, the provider will set your credit limit and interest rate. Remember this may not be the rate advertised, known as the APR, as this only has to be offered to 51% of all applicants. The rate you get will be decided by your own personal circumstances.

You’ll get your new credit card in the post, and once you activate it it’ll be ready to use.